WASHINGTON, April 11, 2023 – The ERISA Industry Committee (ERIC) joined with like-minded coalition groups yesterday to file an amicus brief supporting the legal fight to defeat expansive provisions of Oklahoma law governing the design of employer health plans’ provider networks. These provisions overstep state authority in this area and should be preempted by federal law.
Since the U.S. Supreme Court’s decision in Rutledge, states have continued to test the limits of their ability to control employer-sponsored health plans via regulations purportedly on pharmacy benefit managers and their pharmacy networks, cost-sharing structure, formularies, medical management, and other practices,” said James Gelfand, President of ERIC. “Following this trend, several state measures, including the Oklahoma law currently at issue, attempt to control the design and administration of self-funded health plans governed solely by the federal Employee Retirement Income Security Act (ERISA).”
Specifically, Oklahoma’s law subverts ERISA’s uniform standards by:
- Requiring plans to allow any willing pharmacy to participate in the plan’s preferred network.
- Requiring plans to design their standard and preferred networks to include retail pharmacies within certain geographic distances from beneficiaries.
- Limiting plans from excluding pharmacies from their networks if they employ pharmacists on probation.
- Baring plans from providing cost-sharing discounts to employees for using particular pharmacies.
In today’s amicus brief, ERIC and fellow amici outlined the clear extent to which Oklahoma’s law goes beyond the limitations set out in Rutledge and directly infringes on the ability of employers to design and administer self-funded benefit plans under federal ERISA law. The brief focuses on key arguments that:
- ERISA preempts state laws that “relate to” covered benefit plans, including state laws that directly regulate plan design.
- The provider network is a crucial component of an employer-sponsored health plan’s benefit design.
- The challenged provisions of Oklahoma law are preempted according to these principles.
- Allowing this kind of state regulation of network design would erode the protections of ERISA preemption and threaten the nationwide benefits enjoyed by millions of Americans.
“ERIC is confident in the merits of this legal challenge and will continue to fight overreach by state and local laws, such as the provisions of Oklahoma law at issue, that attempt to directly control the design of self-funded benefit plans. Employers with nationwide operations and employees working across the country must be allowed to administer their benefit plans under the uniform federal standards established by ERISA without mandates or compliance burdens imposed by state or local governments,” said Gelfand.